Amazon’s U.S. website currently claims the title of the third most frequented e-commerce destination among South African consumers, despite the company not having an official local marketplace in the region yet. This trend prompts speculation from industry observers that Takealot, a prominent local online retailer, might face significant challenges when Amazon introduces its dedicated South African online platform.
The Discovery Bank’s SpendTrend24 report indicates a remarkable surge in online shopping within South Africa, revealing that e-commerce growth has overtaken traditional in-store purchases. This acceleration isn’t just notable within the context of emerging markets; it’s on par with the development seen in major cities of advanced economies, including Sydney, San Francisco, and Los Angeles.
One of the key drivers behind this e-commerce upswing is the entry and expansion of international e-commerce giants, now serving the South African market with improved logistic capabilities and reduced delivery times. Although Amazon is poised to make its formal debut in South Africa with a localized site later in the year, anticipation and preemptive engagement by consumers suggest a warm welcome and a potentially transformative impact on the country’s online shopping landscape.
Other global e-commerce sites South Africans enjoy include AliExpress, Shein, Wish, and eBay.
Tough times ahead for Takealot
Amazon’s extensive product selection offers a competitive advantage over local e-commerce platforms like Takealot, potentially setting the stage for Amazon to replicate its global success in the South African market. Damon Buss, an equity analyst at M&G Investments, shared insights with Classic Business, suggesting that Amazon’s expansive range and personalized services are likely to position it as a major player in the local online retail sector.
Amazon’s secret weapon lies in its immense global reach and finely-tuned supply chain operations. When Amazon entered the Australian market in 2017, it launched with an impressive 7.5 million products. Over five years, it augmented its offerings to surpass 200 million items, cementing its status as the leading e-commerce platform in Australia.
Buss underscores that Amazon’s unrivaled expertise in customer analytics and a well-oiled logistics framework are pivotal to its triumph. Forecasting a similar trajectory for South Africa, he anticipates that within five years, Amazon could become the dominant force in the country’s e-commerce arena. The underlying ‘flywheel effect,’ where an expanding product range draws in more customers, thereby enabling Amazon to refine its understanding of consumer preferences and further customize its services, is expected to be a catalyst for Amazon’s growth.
Despite such predictions, Phuthi Mahanyele-Dabengwa, CEO of Naspers’ South African division, demonstrates confidence in facing Amazon’s upcoming challenge. In anticipation of Amazon’s planned debut in 2024, Naspers is increasing investments in their online retail subsidiary, Takealot, preparing to confront Amazon’s market entry.
“We are well positioned to deal with whatever Amazon might bring,” declares Mahanyele-Dabengwa, indicating that the South African online retail landscape may soon witness a robust competition between these e-commerce titans.
